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[J-14A&B-2016]

IN THE SUPREME COURT OF PENNSYLVANIA


WESTERN DISTRICT
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, JJ.
MARY E. GLOVER, INDIVIDUALLY AND
ON BEHALF OF OTHER SIMILARLY
SITUATED FORMER AND CURRENT
HOMEOWNERS IN PENNSYLVANIA,
Appellant
v.
UDREN LAW OFFICES, P.C., A NEW
JERSEY DEBT COLLECTOR,
Appellee
EDELLA JOHNSON (A/K/A EDELLA
ROBINSON, A/K/A EDELLA ROBINSON
JOHNSON), ERIC JOHNSON,
INDIVIDUALLY AND ON BEHALF OF
OTHER SIMILARLY SITUATED FORMER
AND CURRENT HOMEOWNERS IN
PENNSYLVANIA,
Appellants
v.
PHELAN HALLINAN & SCHMIEG, LLP,
Appellee

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No. 3 WAP 2015


Appeal from the Order of the Superior
Court entered April 23, 2014 at No. 938
WDA 2012, affirming the Order of the
Court of Common Pleas of Allegheny
County entered June 13, 2012 at No.
GD 11-018015
ARGUED: October 7, 2015
RESUBMITTED: January 20, 2016
No. 4 WAP 2015
Appeal from the Order of the Superior
Court entered April 23, 2014 at No.
1131 WDA 2012, affirming the Order of
the Court of Common Pleas of
Allegheny County entered July 17, 2012
at No. GD 12-005395

ARGUED: October 7, 2015


RESUBMITTED: January 20, 2016

OPINION
CHIEF JUSTICE SAYLOR1

This matter was reassigned to this author.

DECIDED: JUNE 20, 2016

In these consolidated appeals, the Court is asked to determine whether a law


firm, representing a residential mortgage lender in connection with foreclosure
proceedings, can be liable to a borrower for attorneys fees charged in violation of the
Pennsylvania Loan Interest and Protection Law.
The Loan Interest and Protection Law,2 in relevant part, limits the attorneys
fees that a residential mortgage lender shall contract for or receive . . . from a
residential mortgage debtor. 41 P.S. 406. As a remedy for a violation of Act 6s
protective provisions, Section 502 permits recovery of treble damages in a suit at law
against the person who has collected such excess interest or charges.

Id. 502.

Person is defined as an individual, corporation, business trust, estate trust,


partnership or association or any other legal entity, and shall include but not be limited
to residential mortgage lenders. Id. 101.
First, we note that these cases were dismissed on preliminary objections in the
nature of a demurrer. We therefore accept as true all well-pleaded material facts set
forth in the complaints and any reasonable inferences therefrom. See Bayada Nurses,
Inc. v. Dept of Labor & Indus., 607 Pa. 527, 558, 8 A.3d 866, 884 (2010). Appellant,
Mary Glover, alleges that, as counsel for her residential mortgage lender (RML),
Appellee, Udren Law Offices, PC (Udren), collected excessive and unearned fees in
connection with mortgage foreclosure proceedings against her. Separately, EdElla and
Eric Johnson raise similar claims against Phelan, Hallinan & Schmieg, LLP. Because
the Johnsons stipulated that the outcome of their case is dependent upon the resolution

Act of Jan. 30, 1974, P.L. 13, No. 6 (as amended 41 P.S. 101-605) (Act 6).

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of Glovers, the cases were consolidated; accordingly, we resolve both appeals on the
facts of Glovers case.
Glover entered into a residential mortgage in 2002 with Washington Mutual
Bank.3 Following Glovers unsuccessful attempts to obtain a loan modification due to
financial difficulty, the bank initiated foreclosure proceedings.

Udren took several

actions on the banks behalf, including advising Glover, via telephone, of her unpaid
debt and demanding nearly $3,400 in missed payments and fees.

Eventually, the

parties entered into a loan modification agreement that increased Glovers principal
balance, monthly payment, and repayment period. The increased principal included an
amount of approximately $1,600 for escrow, attorneys fees, and other charges. Glover
made monthly payments pursuant to the new modified agreement.
Glover ultimately filed a putative class action against Udren in the Court of
Common Pleas of Allegheny County, alleging, inter alia, that Udren had violated Act 6
by charging unearned and excessive attorneys fees.4 Because it was undisputedly not
a residential mortgage lender under Act 6, see 41 P.S. 101 (defining residential
mortgage lender as any person who lends money or extends or grants credit and
obtains a residential mortgage to assure payment of the debt), Udren filed preliminary
objections, asserting that Glover had failed to state an actionable claim.

At some point, Washington Mutual assigned Glovers mortgage to Wells Fargo.


Neither bank is a party to the instant litigation.
4

Glovers litigation against Udren, et al., has a long procedural history in both state and
federal court. See, e.g., Glover v. FDIC, 698 F.3d 139 (3d Cir. 2012). Relevant here,
Glover agreed to the dismissal, without prejudice, of her Act 6 claims against Udren
from her federal lawsuit, to pursue them in state court.

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The common pleas court agreed, finding that Udrens conduct as a debt collector
was governed by the Fair Credit Extension Uniformity Act (FCEUA), 73 P.S. 2270.12270.6. See Glover v. Udren, No. GD-11-018015, slip op. at 5 (C.P. Allegheny June 13,
2012). Nevertheless, the common pleas court noted, the FCEUA does not apply to
attorneys acting within the scope of their legal representation. See 73 P.S. 2270.3
(defining debt collector to include, inter alia, [a]n attorney . . . attempt[ing] to collect a
debt . . . except in connection with the filing or service of pleadings or discovery or the
prosecution of a lawsuit to reduce a debt to judgment). In terms of Act 6, because
Section 406 refers only to residential mortgage lenders, the common pleas court
concluded that any violation of that provision does not give rise to a remedy against
Udren under Section 502. It therefore sustained preliminary objections and dismissed
Glovers complaint. While addressing related claims under the Unfair Trade Practices
and Consumer Protection Law (UTPCPL), 73 P.S. 201-1 to 201-9.3, the common
pleas court stated, the Legislature would not have intended for legislation that is not
specifically directed to debt collectors to provide a remedy for conduct that is explicitly
excluded from legislation that is directed to debt collectors.

Glover, No. GD-11-

018015, slip op. at 10-11.5


Glover appealed, arguing that, because Act 6 permits a borrower to recover
treble damages from a person who collects excess fees in connection with the
mortgage foreclosure process, and defines person broadly to include but not be

Also in reference to these claims, the court noted that Glover had not averred that she
had paid any charges directly to Udren, rather than to Washington Mutual or Wells
Fargo. See, e.g., id. at 11 n.11.
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limited to residential mortgage lenders, the common pleas court had improperly
narrowed the scope of the statutes protections.
A divided panel of the Superior Court affirmed, holding that, because Section
406s plain language regulates only the conduct of residential mortgage lenders,
Section 502 does not authorize an action against a lenders counsel for a Section 406
violation. See Glover v. Udren Law Offices, PC, 92 A.3d 24 (Pa. Super. 2014). The
majority rejected Glovers contention that person, in Section 502, evidenced a
legislative intent to make a broad set of actors liable for Section 406 violations, because
the term was necessary to address, throughout Act 6s various provisions, conduct by
actors other than residential mortgage lenders. See id. at 30-31 (While the majority of
the provisions in Act 6 apply to residential mortgage transactions, Act 6 also addresses
conduct by actors other than residential mortgage lenders. . . . Thus, the definition of
person in section 101 makes clear that when the term person is used, it is not limited
to residential mortgage lenders.).

The majority reasoned that, had the Legislature

intended Section 406 to reach law firms acting on behalf of residential mortgage
lenders, it would have used express language to that effect in the text.
Judge, now Justice, Wecht dissented from the majoritys resolution of this issue,
construing the statute broadly to effect its remedial purpose of curtailing abuses in the
residential mortgage industry.

See id. at 36 (Wecht, J., concurring and dissenting)

(citing Roethlein v. Portnoff Law Assocs., Ltd., 623 Pa. 1, 12, 81 A.3d 816, 822 (2013)).
When the statutes provisions are read in conjunction with one another, he opined, their
plain language supports Glovers position. See id. at 37 (Section 406 prohibits the

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receipt of improper charges and interest, while section 502 prohibits the collection of
such charges. (emphases in original)).
Judge Wecht also expressed concern that the majoritys decision would permit
residential mortgage lenders to easily avoid regulation, since they often employ proxies
-- such as law firms, serving as both legal counsel and debt collector -- to pursue
payment delinquencies. By using the word person in Section 502, he continued, the
Legislature indicated its intent to broaden liability for the conduct proscribed in Article IV,
including Section 406. What it is improper for an RML to receive, it is improper for an
RMLs proxy to collect, he articulated. Id. at 37.
This Court granted the appeal to resolve whether Section 502 of Act 6 provides a
remedy against any person who has collected unlawful attorneys fees, or whether its
reach, in this respect, is limited to residential mortgage lenders. See Glover v. Udren
Law Offices, PC, ___ Pa. ___, 108 A.3d 28 (2015) (per curiam).
Glover argues that, in order to effect its purpose of protecting homeowners
during the mortgage foreclosure process, the Legislature created, in Section 502, a
remedy for the misconduct of residential mortgage lenders and related entities.
According to Glover, Act 6s plain language belies the Superior Court majoritys narrow
construction, as it contemplates the liability of a person, unambiguously and broadly
defined.

Udrens conduct is actionable because Udren is a person that collected

illegal fees in connection with its representation of the residential mortgage lender in
foreclosure proceedings, she alleges.
Glover continues that the Superior Court majoritys interpretation of Act 6 holds
only residential mortgage lenders that collect their own debt accountable for the

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collection of illegal attorneys fees.

Consequently, she posits, a lenders use of a

surrogate renders any violation of Section 406 irremediable -- an outcome that the
Legislature presumably did not intend and which frustrates the statutes purpose.
In their separate brief, the Johnsons incorporate the arguments advanced by
Glover.6
In a brief as amici curiae in support of reversal, AARP, National Consumer Law
Center, and Community Legal Services of Philadelphia argue that, under the Superior
Courts unduly narrow interpretation, the prohibitions of Act 6 are too easily evaded by
residential mortgage lenders who can -- and regularly do -- hire attorneys and other
third parties to conduct debt collection and foreclosures.

According to amici,

homeowners are often charged unearned attorneys fees, in violation of Act 6, that
increase the cost of averting foreclosure.

Amici continue that the Pennsylvania

Legislature sought to rectify abuses by several parties to the system, including


residential mortgage lenders and their proxies. They conclude, therefore, that Act 6s
provisions should be construed broadly to effectively prevent the harmful practices that
the Legislature prohibited.
Udren asserts that the language of Section 406 plainly does not apply to
attorneys representing residential mortgage lenders. It maintains that Section 502 is a
generic civil-action provision, and a construction that expands Section 406 liability would
require judicial revision of the statutory language. Further, relying on the common pleas
6

Additionally, they ask the Court to hold that Act 6 applies to their mortgage, which
exceeded the statutory limit of $50,000 when executed, because it did not enter
foreclosure until 2009, after the statute was amended to raise the qualifying amount.
This issue was not before the common pleas court or the Superior Court, nor was it
presented in the petition for allocatur. Accordingly, we do not consider it.
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courts suggestion, see Glover, No. GD-11-018015, slip op. at 10-11, Udren claims that
the Legislature would not have impliedly created liability for attorneys as debt collectors
in Act 6, a usury statute, while expressly exempting them from such liability in the
FCEUA, which is designed to regulate debt collection specifically. See 73 P.S. 2270.3.
Udren also contends that the Superior Court majoritys interpretation would not
leave Glover without a remedy, as demonstrated by her federal lawsuits against
Washington Mutual and Wells Fargo. Moreover, Udren observes, to the extent that it
acted outside the scope of an attorney prosecuting a lawsuit to judgment, the FCEUA
contemplates its liability. It concludes that, in any event, as Glover does not dispute that
she paid the disputed fees to Wells Fargo, not Udren, any Act 6 claim should lie against
Wells Fargo.
Because the parties ask us to interpret Act 6, our object is to ascertain the
Legislatures intent, giving effect to all of the relevant statutory provisions. See 1
Pa.C.S. 1921(a). The best indication of legislative intent is generally the statutory
language itself. See Burke ex rel. Burke v. Independence Blue Cross, 628 Pa. 147,
___, 103 A.3d 1267, 1272 (2014).
Reading Sections 101, 406, and 502 cohesively, it is evident that Glovers claims
are cognizable under Act 6. The plain and explicit terms permit "[a] person who has . . .
paid charges prohibited or in excess of those allowed by this act to recover treble
damages in a suit at law against the person who has collected such excess . . .
charges.

41 P.S. 502 (emphasis added). Significantly, as well, the Legislature

expressly defined person to include but not be limited to residential mortgage


lenders.

Id. 101 (emphasis added).

Under a straightforward application of the

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statute, then, Section 406 restricts the circumstances under which residential mortgage
lenders may contract for or receive fees, while Section 502 provides a broad remedy
against anyone who has collected such fees. Accordingly, consistent with the position
expressed in the Superior Court dissent, we conclude that a borrower may recover
under Section 502 from any entity -- not solely the residential mortgage lender -- that
collects excessive attorneys fees in connection with a foreclosure.
This approach also is in keeping with the remedial purposes of the statute, per
which the enactment should be construed liberally to effectuate such aims. See
Commonwealth ex rel. Creamer v. Monumental Props., Inc., 459 Pa. 450, 459, 329
A.2d 812, 816 (1974). As this Court has previously explained, Act 6 is a usury law,
designed to protect borrowers against improper mortgage lending practices. Roethlein,
623 Pa. at 14, 81 A.3d at 824. In Article IV, the Legislature identified industry customs it
deemed particularly pernicious, such as the initiation of foreclosure with insufficient
notice, the imposition of a penalty for prepayment, and the collection of unreasonable
attorneys fees. See 41 P.S. 403, 405, 406. In order to enforce these protective
provisions, the Legislature created strong remedies and penalties such as treble
damages, shifting of litigation costs, and a $10,000 fine. See id. 502, 503, 505. It
further directed that these mechanisms are intended to supplement any remedies and
penalties provided by any other statute. See id. 507.
As Judge Wecht noted, the use of debt collectors and other third parties is
common in the mortgage industry, see Glover, 92 A.3d at 36 (Wecht, J., concurring and
dissenting), as well as in the broader context of lending, generally. In the FCEUA, the
Legislature sought directly to curtail abuses by these third parties -- including attorneys,

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when their actions were taken in their capacities as debt collectors.

See 73 P.S.

2270.3. In the statute at issue here, the Legislatures use of the term person in
Section 502, which it defined to include actors other than residential mortgage lenders,
suggests an intent to hold accountable any of the entities that might have engaged in
the abusive practices specifically prohibited in Article IV.
The plain language of the statute does not exempt attorneys, debt collectors, or
any other third parties from liability in this regard.

In contrast, the Superior Court

majoritys holding effectively imposes a non-textual limiting construction on the word


person, as it appears in Section 502.

Such a position contravenes the core and

conventional principle of statutory construction that, when a statutes terms are plain,
the courts are bound to enforce them. See 1 Pa.C.S. 1921(b).
Furthermore, we reject Udrens suggestion that, where conduct is excluded from
one regulatory regime, it necessarily must go unregulated in others.

See Brief for

Appellees at 20-24. In fact, there are various instances of overlapping, coordinated,


and uncoordinated protections contained within the diverse range of state and federal
regulatory statutes, particularly those governing consumer affairs. See, e.g., 73 P.S.
2270.4(a) (providing that conduct proscribed by the federal Fair Debt Collection
Practices Act, 15 U.S.C. 1692-1692p, is also unlawful under the FCEUA); 42 Pa.C.S.
2524(c) (prohibiting the unauthorized practice of law and deeming it a violation of the
UTPCPL).

Conduct that is omitted from, or even permitted by, one regulatory

framework may nonetheless violate another. See POM Wonderful LLC v. Coca-Cola
Co., ___ U.S. ____, 134 S. Ct. 2228 (2014) (holding that a company may bring a claim
against a competitor under the Lanham Act, 15 U.S.C. 1125(a)(1), for misleading

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product labeling, even where the challenged labeling may be permitted under the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301-399f). Indeed, [w]hen two
statutes complement each other a construction that allows one to preclude the
operation of the other would show disregard for the [legislative] design. Id. at ___, 134
S. Ct. at 2238; see also J.E.M. Ag Supply, Inc. v. Pioneer HiBred Int'l, Inc., 534 U.S.
124, 144, 122 S. Ct. 593, 605 (2001) ([W]e can plainly regard each statute as effective
because of its different requirements and protections.).
Notably, the residential mortgage arena is one, within the broader landscape of
consumer protection, in which the Legislature has provided directed and enhanced
protections.

Thus, whatever liabilities and/or exclusions there may be under other

consumer-protection statutes, Act 6 expressly imposes a specific liability upon any


person who has collected attorneys fees from a residential mortgage debtor in excess
of that which the statute otherwise permits. By the same token, the fact that a law firm
potentially faces liability under some other regulatory framework is irrelevant to whether
Act 6 entitles Glover to damages, except with respect to purely overlapping monetary
relief.
In the dissents view, Section 502 affords relief against only a person who has
violate[d] a relevant substantive provision of law, such as Section 406. Dissenting
Opinion, slip op. at 5. As explained above, however, Section 502 instead specifically
creates a cause of action against persons who have collected excess interest or
charges. 41 P.S. 502. Had the Legislature intended to restrict Section 502 liability
solely to those persons who have violated other provisions of the law, it could readily
have so prescribed. Since, however, collection is the express and controlling litmus

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under Section 502, per the statute, Udrens liability ultimately must turn on whether or
not it has collected excess or improper charges. Id.
Presently, we offer no opinion concerning the meaning of the term collected, as
employed in Section 502, because the matter is not sharply in focus in this appeal.
Rather, the appeal was allowed to consider the limiting construction on the term
person which the Superior Court imposed, i.e., [d]oes Act 6, 502 provide a remedy,
as the explicit language of the statute establishes, against any statutorily defined
person collecting statutorily prohibited fees on behalf of residential mortgage lenders?
Glover v. Udren Law Offices, P.C., ___ Pa. ___, 108 A.3d 28 (2015) (per curiam). We
hold that it does, according to the enactments plain language.
Accordingly, the order of the Superior Court is reversed and the matter is
remanded for further proceedings.

Justices Todd and Dougherty join the opinion.


Justice Baer files a dissenting opinion.
Justices Donohue and Wecht did not participate in the consideration or decision
of this case.

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